China’s oil giants aim to spend the most in five years in pursuit of higher energy output. But unlike global rivals investing in top-tier assets, the state-owned producers are trying to boost supply from fields that are either old and high-cost or new and challenging.

China’s big three — PetroChina Co., Sinopec Corp. and Cnooc Ltd. — are raising combined capital expenditure to about 517 billion yuan ($77 billion), up 18 percent from last year. That’s almost back to levels seen before oil’s collapse in 2014, after President Xi Jinping ordered them to focus on raising domestic output to bolster national energy security.

Their spending plans contrast with global titans such as Royal Dutch Shell Plc and Chevron Corp., who are keeping a tight grip on spending and returning cash to investors via dividends and share buybacks. Meanwhile, Exxon Mobil Corp. is pouring money into world-class assets that will raise output in the coming years, including Guyana, Papua New Guinea and Brazil, as well as the Permian Basin.

That’s not the case for the Chinese producers working mainly with costly wells and aging fields at home. PetroChina, the biggest, is focusing its exploration efforts in Xinjiang, where per-well spending could be 10 times higher than other fields, Huatai Financial Holdings estimates.

Returns Uncertain

“Investors have sufficient reasons to question whether the increased spending may generate reasonable returns,” said Laban Yu, a Jefferies Financial Group Inc. analyst in Hong Kong. “The oil companies may just be implementing the government’s order, even if that means they produce oil at a high cost.”

PetroChina plans to raise spending by 17 percent this year to 300.6 billion yuan, having overshot last year’s budget by 13 percent. Cnooc targets an increase of as much as 27 percent. Sinopec, officially known as China Petroleum & Chemical Corp., will boost capex by 16 percent.

The higher capex is likely to worry Sinopec investors, where the upstream business continues to lose money, Morgan Stanley said in a research note. Analysts at Jefferies said in their report that the refiner may not have the resources to economically justify its level of increase on upstream spending given that its production guidance is only 1.4 percent higher.

The trio’s shares declined Monday in Hong Kong. Sinopec sank as much as 3.2 percent to the lowest in two months. PetroChina fell as much as 2.8 percent, while Cnooc tumbled 5.3 percent. The city’s benchmark Hang Seng Index lost as much as 2.1 percent.

Xi’s Order

President Xi’s call last year for higher output came as China, the world’s biggest importer of oil and gas, was roiled in an escalating trade war with the U.S.

It also follows years of declining output and rising demand. The nation’s reliance on oil imports has climbed steadily to over 70 percent as domestic production shrinks. A researcher at China National Petroleum Corp., the parent of PetroChina, forecast the nation’s crude output may only be restored to 2016’s level of about 200 million tons by 2022, even as the majors increase spending.

Meanwhile, China’s state firms are increasing their focus on natural gas amid a government push to use more of the fuel instead of coal. Unlocking the country’s large shale reserves is an important part of the process, but challenges are plentiful.

China’s reserves are deeper, harder to reach and more broken up than those in North America. Western companies have also been wary of selling advanced fracking technology to China amid intellectual property concerns.

Under Pressure

“There is no question that those companies are under a lot of pressure to quickly grow production,” said Sanford C. Bernstein & Co. analyst Neil Beveridge in Hong Kong. “There will be a concern that in our flat commodity price environment, this could erode returns, and shareholders will want to see discipline.”

Yet, he added that the balance sheets of Chinese majors are strong enough to support higher spending. PetroChina and Cnooc have net cash flows, while Sinopec has low gearing, Beveridge said.

There are some promising projects under development, including Cnooc’s Bozhong 19-6 offshore China, which is potentially the largest discovery in the Bohai Bay area in the past 50 years. The explorer also has a 25 percent stake in the Exxon-operated Stabroek Block in Guyana, the world’s biggest new deepwater project.

“For listed companies, even if they’re state-owned, reasonable discipline in investment is still expected of them,” said Anna Yu, an analyst at ICBC International Research Ltd. “Management have repeatedly said they would keep the bar high in terms of upstream investments. There’s no reason to question their resolve until reality shows otherwise.”